What is the pension triple lock and how does it affect me after the Autumn Statement?

Pensioners may see a real-terms cut in finances  (Kirsty O’Connor/PA)
Pensioners may see a real-terms cut in finances (Kirsty O’Connor/PA)

After former Prime Minister Liz Truss reversed her promise to increase state pensions in line with surging inflation, the Autumn Budget has confirmed the current government’s plans for the state pension triple lock.

Speaking in the House of Commons on October 17, Jeremy Hunt was asked whether he could confirm that the state pension will rise with inflation in April, as promised under the triple lock.

Hunt hesitated to comment, saying, “I am very aware of how many vulnerable pensioners there are and of the importance of the triple lock.

“As I said earlier, I am not making any commitments on any individual policy areas, but every decision we take will be taken through the prism of what matters most to the most vulnerable.”

Here’s what the Autumn Budget said about state pensions and how this might affect you.

What is the pension triple lock?

First introduced by the Conservative and Liberal Democrat coalition government in 2010, the pension triple lock is a government guarantee that state pensions grow each year in line with whichever is highest out of earnings, inflation - as measured by the Consumer Prices Index (CPI) - or 2.5 per cent.

This means pensions rising in line with the inflation rate in April next year.

The CPI inflation for September stood at 10.1 per cent, according to the latest figures from the Office for National Statistics. Average earnings have risen by 5.4 per cent year on year.

In its 2019 election manifesto, the Conservative Party said it would keep the triple lock in place for the duration of this Parliament.

How will the state pension triple lock affect me after the Autumn Statement 2022 ?

Former Work and Pensions Secretary Therese Coffey initially said the triple lock is to be suspended for 2022-2023. Instead, the state pension will be determined by either the inflation rate or 2.5 per cent.

She said the triple lock would then be restored for the remainder of this Parliament, which ends in 2024.

The current Chancellor, Jeremy Hunt, confirmed that the triple lock will be protected, meaning pensioners will also get a rise in the State Pension and the Pension Credit in line with inflation.

The triple-lock guarantee was initially introduced to ensure pensioners did not see any rise in their state pension being overtaken by the rising cost of living.

How much is the current state pension?

Men and women are currently entitled to the state pension at the age of 66, but this is scheduled to rise.

State pension comes in two tiers - the basic state pension (bSP), which is based on a person’s National Insurance contribution record, and the additional state pension is partly earnings-related.

Future pensioners who turned 66 on or after April 6, 2016, will receive the new state pension (nSP).

The full, new flat-rate state pension (for those who reached state pension age after April 2016) is £179.60 a week.

The full, old basic state pension (for those who reached state pension age before April 2016) is £137.60 a week. They may also get a Pension Credit top-up.

Under pension triple lock, state pensioners would get a rise of about 10 per cent in April 2023, which would take their weekly payment to just over £200, alleviating some of the other pressures on their budgets during the cost-of-living crisis.